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By Joan Gralla
NEW YORK, Dec 9 (Reuters) - The founder of private equity firm Riverstone Holdings LLC, David Leuschen, will pay $20 million in restitution to resolve his role in a kickback probe of New York’s state pension fund, Attorney General Andrew Cuomo said on Wednesday.
After the state pension fund invested $150,000 in a joint venture between Riverstone and The Carlyle Group [CYL.UL], Leuschen made an “investment” of $100,000 in a film produced by the brother of the former top pension investment officer, David Loglisci, Cuomo said.
A two-year probe into kickbacks that investment firms paid to middlemen in order to win the often lucrative business of investing the state pension fund has already resulted in five guilty pleas, the latest by Elliott Broidy, a California venture capitalist.
Broidy plead guilty to a felony for bribing four top officials in the New York state comptroller’s office.
This development for the first time involved the former Democratic comptroller, Alan Hevesi, in the kickback probe because he took luxury overseas trips paid for by Broidy, according to a source familiar with the travel records.
For details on Broidy, who resigned as the chairman of Markstone Capital Partners, please see: [ID:nN03111009].
Hevesi resigned in 2007 and then plead guilty to a felony for having state drivers chauffeur his ailing wife.
Hevesi has not been charged in Cuomo’s investigation and his lawyer, Brad Simon, declined comment. Loglisci was charged along with Henry Morris, Hevesi’s former top fund raiser; their lawyers have said their clients did nothing wrong.
Cuomo, a Democrat, in a statement said the Riverstone founder’s restitution payment would be turned over to the state pension fund. So far the attorney general has collected more than $100 million for the state and the pension fund.
Riverstone and Carlyle, a private equity fund, had only “limited success” in being chosen to invest New York’s pension fund until they hired Searle, a company linked to Morris, who was a placement agent, Cuomo said.
After hiring Searle, however, Riverstone and Carlyle were chosen to invest $530 million of state pension monies. Carlyle paid Searle more than $10.6 million in fees. (Reporting by Joan Gralla; Editing by Theodore d‘Afflisio)